Circa 77 % Berkshire Hathaway, the conglomerate run by Warren Buffett stocks portfolio is concentrated in just 6 stocks.
And Apple Inc stands out with a 38.5 % share.
In my humble opinion, this lack of diversification is imprudent.
If China invades Taiwan, the probability of which happening I would rate at more than 50 % currently, Apple's market capitalisation could go down by 70 % or more in the space of several weeks. This is due to the fact that much of the components for Apple's iPhones, Macs, iPads are manufactured in Taiwan and China.
Yes, I can see what Warren Buffett is doing. He thinks Apple, Bank of America, Chevron and Coca Cola are well run, have inertia, very high profit margins, very good production processes supported by hundreds of thousands of competent, hardworking people employed by these companies.
In short, the aforementioned companies are too big to fail.
Not in war times, in my opinion! In war times some of these companies could become too big to bail.
Apple - large, institutional type of stock. Buffett uses it, I estimate also to extract information of the habits, fin-tech and financial services consumption of millennials.
Bak of America - a play on the US large corporations, midsize corporations and Wall Street.
Chevron - a US, but also global energy consumption play.
Coca Cola - an emerging markets low-priced high calories intake play.
American Express - a US credit card credit play.
In short, Warren Buffett is betting heavily on the United States of America or he is betting heavily that there will be no catastrophic event literally destroying America's economy.
Yes, this "trick" has worked, because since 1933 the world had not experienced a Great Economic Depression.
The above betting on a "lack of catastrophic US economic risk" I have to credit Professor Aswath Damodaran, who mentioned it, I read it first by him, analysed it and here I mentioned it above.
Actually, a nuclear war is a catastrophe. And I would estimate the probability of a nuclear war occurring currently at something like 12 %.
To be positive and constructive, though, even if an economic catastrophe befalls USA, the above stocks, which comprise the largest part of Warren Buffet run Berkshire Hathaway's portfolio should be able to withstand and outperform even.
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